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It is the first of the main banks to tackle the mortgage arrears crisis in this way.

In addition to having some debt written off at the beginning of the new arrangement, they will also have some of the warehoused portion of the loan written off if they stick with the split mortgage repayment schedule.

It is understood the new structure will contain features to reward the repayment of the warehoused portion of a loan in advance by writing off further amounts of debt.

The arrangement is expected to apply to a limited number of borrowers for whom normal forbearance, such as term extension, does not work.

AIB will select customers who can avail of the product based on their disposable income after living expenses.

It is understood it will be for cooperating customers only.

David Hall, a director of Irish Mortgage Holders Organisation, said: "This is a welcome development as a product. It recognises the inevitability of writing off debt."